How Irish fintech could benefit from some northern exposure

In 2018, fintech companies in the Nordics raised €347m in 86 deals. Out of those deals, Sweden represented around 50pc.

The fintech scene in Sweden has continued to grow and the same can be said for the other Nordic countries. The adoption of tech and new solutions in the competitive financial services sector is a challenging but rewarding space for the right companies.

In Ireland in 2018, fintech was the second-fastest growing export sector, up by 17pc year on year. And there is an increasing awareness among Irish fintech and tech companies to look at the Nordic market.

Why choose the Nordic market?

Ireland has an established fintech scene and it has the potential to grow significantly faster in the years to come as the financial sector develops at a rapid pace across the world. Meanwhile, the Nordic market has become more interesting for Irish companies for a number of different reasons.

Brexit and the uncertainty it has created around financial services forces companies to look at new markets. The Nordic market has become well-known abroad because of its success in creating many billion-dollar companies. The English language level is among the highest in the world for non-native speakers, and most companies find the Nordics very transparent. Similar to Ireland, the Nordics also rank high globally for their innovativeness.

In May, the newly published Stockholm fintech report presented noteworthy information for companies considering engaging with the Nordics.

The Stockholm region in particular attracts more than 50pc of total foreign direct investment into Sweden, and Stockholm itself has the highest GDP growth in the Nordics. It is both the geographic and financial core of not just Sweden but the whole of the Nordics.

‘There are significant opportunities for Ireland and the Nordics to cooperate around key issues, developing new initiatives together’

In the Nordics, there are several initiatives to increase the awareness of fintech and financial services both locally and internationally. The Nordic countries are similar in many ways, facilitating a lot of co-operation and collaboration between tech hubs and centres.

Stockholm’s Findec was founded in 2019 and has quickly established its place as Sweden’s hub for fintech, regtech, insurtech and blockchain companies. Its purpose is to boost Sweden’s financial technology ecosystem through networking, knowledge and funding, working with companies from around the world to help them scale and expand.

4 key areas for collaboration

When meeting with people in the banking industry, four topics arise again and again for large banks and financial institutions, which they struggle to solve.

First, utilising big data to get insights into best practice and to better understand customers. Second, payments and how to be part of the value chain in the changing digital landscape. Third, cybersecurity and the challenge of balancing ease of use with adequate security and fraud prevention. And last, but not least, compliance and regulatory challenges, which have significantly affected the trust of the banking industry in the Nordics.

Recent scandals of money laundering and onboarding of fraudulent customers have led to rising concerns among financial institutions. A lot of them require a robust system around customer identification (KYC, or ‘know your customer’) and risk profiling. At the same time, these services need simplicity and cost efficiency. It seems like that has not worked out very well for some of the leading banks in the Nordics, which came as a surprise to the public as well as investors.

There are significant opportunities for Ireland and the Nordics to cooperate around these issues and several more, developing new initiatives together to strengthen the ties between the regions on a macro level.

There are many great opportunities for Irish fintech and tech companies that want to be part of the development of digitising their northern neighbours.